The welfare effect on different income groups of indirect tax changes and inflation in New Zealand

This paper has two main aims, both associated with measuring the welfare ef fects of price changes. First, it examines the distributional effects of th e change in the indirect tax system in New Zealand during the mid-1980s. Se cond, it examines the distributional impact of recent inflation in New Zeal and. The results confirm those of previous studies which found that indirec t taxes in New Zealand did not have a substantially larger impact on low in come groups compared with high income groups. Furthermore, the introduction of the goods and services tax does not appear to be regressive. However, r ecent price changes in New Zealand have had a higher impact on the high inc ome groups, although this tendency is quite small.